Whatever its duration and outcome, the Asian financial crisis will be remembered for destroying the conventional wisdom that East Asia's economies would prosper indefinitely. Still in question are the political lessons that Asians will draw from the crisis. How much, for example, will political freedom be valued as a necessary corollary to sound economic performance? Or will those who argue that sound economic management is the political key prove persuasive? And will a "Confucian" version of the discredited "Asian values" thesis find adherents?

The crisis began on July 2 of last year when the Thai government ceased wasting foreign reserves on a defense of the baht and allowed it to fluctuate versus the dollar. The resulting "managed float" immediately proved unmanageable. The baht's fall triggered a regional currency and equity cascade. As it swept from Bangkok through Kuala Lumpur, Manila, and Jakarta to Seoul and Hong Kong, upbeat exponents of "Asia rising," "the East Asian model," and an imminent "Pacific century" barely had time to edit these phrases from their screens and diskettes.

A few early warnings had been sounded. The World Bank had worried about trends in Thailand before July. And some skeptics, like the MIT economist Paul Krugman, had doubted that East Asia's breakneck economic pace could be sustained. Nevertheless, most analysts were sanguine and slow to reconsider. But in hindsight it is clear that for much of Asia 1997 was an annus horribilis. The crisis appeared to have abated in some countries earlier this year, notably Thailand and South Korea, but it worsened in Indonesia, Southeast Asia's largest economy. These days most observers expect the crisis, or its aftershocks at any rate, to endure into 1999 if not beyond.

In 1997 five East Asian stock markets -- those of Indonesia, Malaysia, the Philippines, South Korea, and Thailand -- lost more than three-fifths of their value in dollars. Economic, environmental, and health problems due to Indonesia's prolonged drought and forest fires compounded these shocks in maritime Southeast Asia. Meanwhile, Japan's